Consumer and Producer Surplus

Question 1

What is Consumer Surplus a measure of

Answer 1

Measure of welfare that people gain from buying and consuming goods and services

Question 2

Define consumer surplus

Answer 2

the difference between the total amount that consumers are willing and able to pay for a good or service and the total amount that they actually do pay

Question 3

Where is consumer surplus on a graph

Answer 3

area below the demand curve and above the price

Question 4

When PED is price elastic, what is consumer surplus

Answer 4

Zero

Question 5

When PED is perfectly inelastic, what is consumer surplus

Answer 5

infinite

Question 6

When demand is more inelastic, what is consumer surplus

Answer 6

Greater potential consumer surplus

Question 7

What is price discrimination

Answer 7

selling the same good at different prices to different buyers

Question 8

Why do businesses use price discrimination

Answer 8

To turn consumer surplus into producer surplus - turn over higher revenue and profits

Question 9

Define producer surplus

Answer 9

The difference between the price at which producers are willing and able to supply a good for and the price they actually receive.

Question 10

How is producer surplus shown on a graph

Answer 10

Area above the supply curve and below the market price